Trading
Breakouts with the SureFireThing Camarilla Equation

The
L4 and H4 levels are actually phenomenally good 'breakout' levels
themselves. If price pushes up thru the higher H4 level, the chances
are it is going to keep on running that way. Our own research indicates
that in such a breakout on the S&P, a move of up to 7 points
can be expected, which is, as you will understand, a VERY significant
proportion of a typical day's volatility.

Running
with the breakout

As
the original equation specified no levels outside L4, knowing when
to exit the trade becomes highly subjective. This is where SureFireThing's
'{b}' version of the Equation becomes useful, as the 'profit target'
of the {b} version seems, in our experience, to be quite a good
level to watch for the move to falter. Taking profits here might
often be a prudent course of action, as once your money is off the
table, the worst that can happen is that you earn some interest
on it! Stoplosses, of course are also subjective - we find on the
S&P that 2 points or less is usually sufficient. Once again,
SureFireThing's '{b}' version supplies a suggested stoploss, which
seems to actually be quite a good suggestion in our experience.

In
this example from the FTSE (The UK equivalent of the S&P) on
1st July 2003, the breakout is clearly signposted downwards, as
is the suggested profit target. This particular breakout uses the
levels from the {b} version of the equation, which usually correspond
quite well to L4.